You’ve probably noticed that cyclically sensitive areas have been on a roll. Think EZ autos, industrials in the US—stuff that is correlated to the global manufacturing cycle. JPM warns that this rotation could lead to a “risk scenario” whereby a global manufacturing rebound could drive broader rally participation and a shift in leadership from AI-anything to cyclicals and high beta (think materials). They think it is a low probability, but they’re watching it. So, we’ll be watching it too. We had brought up our industrials, a tad bit of energy and materials a few weeks ago. But we’re not all in on this trade.
V and MA agreed to cap card-swipe fees, which merchants expect will save them $30bn+ over the next 5 years (which comes out of banks’ hides like JPM, BofA, Citi). The legal fight has been roughly 2 decades in the making. Also, the deal lets retailers to charge consumers extra at checkout for using the credit cards and use tactics to steer customers away from using V and MA cards. Goodbye, guaranteed 2% of the transaction.
BofA removed NFLX and put SPOT on its US 1 list.
Trump M&T will trade today under the ticker DJT. Looks like the ticker is up a lot (+>50%) as we write our note.
Former CEO Neumann is back and wants to acquire WeWork out of bankruptcy for >$500mm.
Global hedge funds shifted capital from the US to the EZ, per Reuters.
AMZN is expanding same-day delivery of prescription meds to NYC and LA. So, folks can get flu meds, diabetes drugs, etc. within hours. It is stocking common meds and can process an order within minutes. They already have this service in Austin, Indianapolis, Miami, Phoenix and Seattle. Walgreens and CVS, wake up. None of us like standing in your sad, slow-moving lines filled with equally downtrodden customers ahead of us. I would gladly anticipate the beep-beep-beep of the AMZN truck delivering my kids’ cold medicines. But talking about AI with this? OK, you’ve gone too far, AMZN. Just stick with the main story. It’s enough to get us excited as customers and investors. Not everything needs an AI bent.
Viking is hoping to ship its weight loss pill in the future, and the co will start phase 2 of its trial later in 2024. Patients took a daily pill and lost up to 5.3% of their weight within 4 weeks. The pill is similar to Lilly’s Zepbound by imitating 2 naturally produced gut hormones (GLP-1 and GIP). Its stock is up +15% on the good trial news. Takeover candidate. Imagine AMZN getting this one… Feeling fat today? Order some new stretchy pants, and we’ll deliver a weight loss pill along with ‘em within the hour too.
Some US execs, including AAPL’s Tim Cook, are in China this week for a biz summit. Sounds like they’ll be meeting with Xi. So, expect soundbites like describing China as “vibrant and so dynamic” and picture ops with promises and handshakes. These execs know they must make nice to get some field advantage over there. With China iPhone sales down -33% in Feb, Cook has got to do some tap dancing.
That chocolate bunny is going to cost a lot more this year, with cocoa up 3x in the past 12 mo to $10k/metric ton. Those hoppin’ mad will include Hershey, Mondelez, Lindt, and other chocolatiers…as well as impulse buyers who are critical to these companies, but who don’t want to pay Kobe beef prices for a chocolate bunny. Bean disease in West Africa has contributed to the cost increase. Hedges look like they are done later 2024 and into 2025, so the co’s will need to get this resolved, otherwise they will be hurting even more.
Economists are forecasting 2 more PBOC RRR cuts this year, as the gov tries to stimulate the economy. Also, the PBOC is trying to set a floor on the yuan, with its strongest fix since Jan. Also, they’re trying to get developers loans from banks. (Bloomberg and Bloomberg)
Blackrock is calling for blue skies this spring from market investors.
MS is saying that those egg shells will crack because we’re getting greedy.
Employment is below pre-pandemic levels in almost 1/3 of US states, per Bloomberg. The Fed is watching this, of course. Part of this shift has been the move from CA to….anywhere. Interesting, at the same time, home price growth has accelerated, so buyers still want to buy. Px were up +6% in Jan y/y.